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Improving Sustainability Practices in the Supply Chain
Sustainability in Supplier Management aims to ensure that the way we conduct business with our suppliers is in line with environmental, social and ethical standards. Bayer regards adherence these sustainability standards within the supply chain as a crucial factor in the value chain.
By acting responsibly in collaboration with our suppliers, we aim to minimize risks and create stable, long-term business relationships with our partners. It is also an important strategic lever for Bayer in safeguarding both its global competitiveness and the supply of materials and services. For this reason, the company applies not just economic standards, but also environmental, social and corporate governance (ESG) standards in choosing new suppliers or continuing its relationships with existing ones. These principles are defined in Bayer’s Supplier Code of Conduct, which generally forms the basis for our collaboration with suppliers.
To improve sustainability practices within the supply chain we follow a 4-step management process:
Targets for 2023 and beyond
Bayer verifies the observance of the code principles by our suppliers through online assessments, conducted by EcoVadis, an external provider of sustainability evaluations, or on-site audits by external audit companies. Suppliers are selected for these evaluations according to their strategic importance and a sustainability risk analysis combining country and category risks. We continued to expect that all suppliers fulfill our sustainability expectations: all strategically important suppliers must present an EcoVadis assessment of at least 45 of 100 points (‘green’ assessment) or a comparable sustainability audit result. Furthermore, potential new suppliers with a high inherent sustainability risk and procurement spend of more than €250,000 are examined in advance regarding sustainability aspects.
In connection with the further development of Bayer’s sustainability strategy, we intend to set new priorities within our four-step management process to improve sustainability practices in the supply chain. Our activities aiming at implementing and further developing steps 1–3 will remain in place and continue to serve as the basis for our work. However, we will continue to expand the activities regarding supplier development (step 4). With the Sustainability Supplier Development Framework, Bayer supports relevant suppliers and enable them to demonstrate positive successes with regards to their sustainability performance over the long term. Bayer retains the right to terminate a supplier relationship if no improvement is observed and follow a consequence management approach. Bayer works continuously to strategically evolve sustainability topics in procurement, particularly greenhouse gas emissions in the value chain (GHG Scope3), human rights, and supplier inclusion & diversity. More information about these focus topics can be found on Strategic Sustainability Focus Areas.
Through CDP Supply Chain, we ask our strategically important suppliers and those who account for a significantly high proportion of our scope 3 emissions to disclose their climate protection program with Bayer. We aim to learn more about their greenhouse gas emissions and our share of their emissions, attributable to the goods and services sourced by us. We also look at their reduction targets and use of renewable electricity. Furthermore, we aim to identify potential for reducing greenhouse gas emissions among our suppliers and incorporate this potential into our supplier development efforts.
Since 2021, we also developed additional Procurement Sustainability KPIs for Supplier Inclusion & Diversity.
Respecting human rights along the supply chain is anchored in Bayer’s sustainability strategy and procurement plays a key role in implementing all necessary measures.
For a continuation of our fully integrated sustainability approach, we are further implementing binding sustainability requirements in our global Procurement process landscape in 2022. More information can be found in Bayer Sustainability Report.
For assessments we work together with EcoVadis, a leading web-supported platform for sustainability performance monitoring. The assessments are based on a web-supported, modular questionnaire completed by the supplier, coupled with accompanying verification documents and 360° screening.